Filecoin is choppy and consolidating. How do we approach this ?
I think the chart should be stretched out a bit longer. But i'm quite impatient, and the charts I make are to illustrate what I would like to see ofcourse. Besides that, normally I don't include multiple pivots in my forecasting and generally think it looks amateurish to do so. As I think that requires constant adjustment on every new candle, which is not possible in a tradingview idea. Causing the analysis to outdate itself right away. However I am feeling adventurous tonight and think these pivots I expect based on this chart are realistic.
In the bottom chart, there is the trend visualized as overlapping, transparant bars. Green represent the bullish trend, red represents the bearish trend. Both can be present at the same time, and the art of analyzing trends is to predict which one of the two will become dominant enough so the other will starve.
Trends move in cycles, and a way to recognize the end of a trend cycle is when both the bullish trend and the bearish trend is below 20. That's an anchor point which is used by many screeners and bots. However lower values are also used such as 15 or 16. But generally speaking, 20 is a good treshold value to determine a trend has ended if you do chart analysis by yourself.
So without further ado, here's my analysis. (tl;dr: no-trade zone. Go spend time with friends and family coming week).
On the bottom chart red columns are bearish trend and green columns are bullish trend. Both are stable but also decreasing steadily. When the trend drops below 20 it starts to cycle into a new one. Which means volatility and momemtum have reached their lowest point and will start to increase from then on. However, the direction of the trend is something we have yet to estimate.
But there is an exception to this though. Because there is a consolidative squeeze happening (I marked the starting point with two black dots on the crossover of the bands with the channels). It is hard to estimate when squeezes like this finish, configuring an alert when the bands and channels cross again is something you'd like to do. Once this happens, an indicator such as the parabolic SAR can be used to estimate the trend direction.
So we have two possible catalysts right now, and this squeeze is the most unpredictable. The chance is high it happens before the current trend can actually 'fade out' on the bottom chart. Then the squeeze will ignite a new trend right away, causing a steady (explosive) increase of momentum and volatility. Sometimes these moments are used to setup traps as well or shake out overleveraged traders with large wicks. As it is hard to estimate the direction properly if you enter a position too early on this.
If this squeeze will develop slowly, then the bottom chart will show the trend fading out untill it drops below 20 eventually. Once that happens, the chart becomes more interesting again and things like support/resistance levels become more important. However, actually opening a position should be done once you have a clear entry. After the trend crossed over 20 again (important). I've put an extra ceiling, on 40. There's these intermediate pushes happening that can't get beyond this level. Possible "hidden" breakouts can be anticipated if the trend is actually strong enough to get passed that point.
If the consolidating squeeze ends pre-maturely the new trend could break out during one of those intermediate pushes, with price action following shortly after. I've mirrored the decreasing trend line to illustrate how that would look like. This mirror image however does not predict wether price go up or down. It predicts the price will increase in momentum and force. This is followed by an increase or decrease in price. So the price can go down, the price can go up. I don't see why it would go down, as filecoin is awesome.
Please leave a reply in the comments if you have enjoyed reading this article or have any questions. The feedback and talk is very encouraging to put in more effort in my publications. I also do livestreaming on trading view streams occasionally, but it is pretty tense talking by myself still. So if you like to talk about charting and exchange ideas with me on stream, I'm definitely open for it. I have derived my knowledge from technical indicators, book reading and backtesting (as i am a developer). But need to improve a lot on harmonic patterns. I also like to explore gann analysis or Elliot waves.
